Bay area market going up?

[raptorduck]

justme. Ok, bad choice of headline. My bad. I brought up LA and LAH because those were the markets I was looking in before I decided to start looking at RSF and are the only markets I am keeping close tabs on now. I was surprised with the LA number, hence why my headling had a “?.”

I am not claiming anything. I have no idea where the market is going although I do share the sentitments of folks here that it is probably going further south; except of course my current neighborhood in San Jose. The market there is going up, way up, by leaps and bounds, buy while you can and make sure to offer way above asking.

[gn]

So that particular pressure chasing prices down is significantly less than what you have in say, Temecula.

San Diego county is next to Temecula.
The bay area is next to the central valley.

People in Temecula commute to work in San Diego.
People in the central valley commute to work in the bay area.

Both Temecula & the central valley has a lot of land to build on. The central valley to the bay area is what Temecula is to San Diego.

But there is more: the worst real estate bubble in CA is NOT the Inland Empire (Riverside & San Bernadino counties). It's the central valley. Why ?

Speculators from the bay area flocked to the central valley & drove prices to insane levels. So, on the surface, the devastation may occur in the central valley, much of the the money that's lost is bay area's money.

[gn]

So that particular pressure chasing prices down is significantly less than what you have in say, Temecula.

San Diego county is next to Temecula.
The bay area is next to the central valley.

People in Temecula commute to work in San Diego.
People in the central valley commute to work in the bay area.

Both Temecula & the central valley has a lot of land to build on. The central valley to the bay area is what Temecula is to San Diego.

But there is more: the worst real estate bubble in CA is NOT the Inland Empire (Riverside & San Bernadino counties). It's the central valley. Why ?

Speculators from the bay area flocked to the central valley & drove prices to insane levels. So, on the surface, the devastation may occur in the central valley, much of the the money that's lost is bay area's money.

[bsrsharma]

Colombo brings up an interesting point. Gateway cities should be considered as international markets; that gives them a powerful safety net. NYC/Boston are coupled to Europe, Bay Area is coupled to Asia, Seattle probably to Canada. When prices go down below a threshold, they become a bargain for the newly rich foreigners for whom $ price tags look like Big-Lot/Wal-Mart. Unfortunately, SD & LA are coupled to Mexico that doesn’t have such a strong purchasing power.

[bsrsharma]

Colombo brings up an interesting point. Gateway cities should be considered as international markets; that gives them a powerful safety net. NYC/Boston are coupled to Europe, Bay Area is coupled to Asia, Seattle probably to Canada. When prices go down below a threshold, they become a bargain for the newly rich foreigners for whom $ price tags look like Big-Lot/Wal-Mart. Unfortunately, SD & LA are coupled to Mexico that doesn’t have such a strong purchasing power.

[gn]

bsrsharma,

Europe has its own bubbles (London, Paris, Madrid…). And these bubbles are deflating as well. The rich foreigners that you mention either:

1. Already invested their money into these bubble & are scrambling to escape.
2. Or, if they have $$$ as prices come down will have plenty to choose from in Europe.

The same thing with Asia.

[gn]

bsrsharma,

Europe has its own bubbles (London, Paris, Madrid…). And these bubbles are deflating as well. The rich foreigners that you mention either:

1. Already invested their money into these bubble & are scrambling to escape.
2. Or, if they have $$$ as prices come down will have plenty to choose from in Europe.

The same thing with Asia.

[bsrsharma]

gn – There is plenty of money internationally (Euro $, Petro $, China/Japan/Korea $) that keeps on growing every day. US trade deficit is about $2B per day. When the price is right, they will all swoop down and gobble up like vultures.

[bsrsharma]

gn – There is plenty of money internationally (Euro $, Petro $, China/Japan/Korea $) that keeps on growing every day. US trade deficit is about $2B per day. When the price is right, they will all swoop down and gobble up like vultures.

[gn]

When the price is right, they will all swoop down and gobble up like vultures.

The only problem is: for the price to be "right", it has to be at levels below "what's justified by the fundamentals".

Remember, there's 2 kind of money: smart money & dumb money.

"dumb money" purchased during the bubbles based on "psychology".

"smart money" will purchase based on the fundamentals. The money that you mention is "smart money".

 

[gn]

When the price is right, they will all swoop down and gobble up like vultures.

The only problem is: for the price to be "right", it has to be at levels below "what's justified by the fundamentals".

Remember, there's 2 kind of money: smart money & dumb money.

"dumb money" purchased during the bubbles based on "psychology".

"smart money" will purchase based on the fundamentals. The money that you mention is "smart money".

 

[bsrsharma]

Exchange rate matters too. If UK Pound = 4 US $ say, A Londoner may like to sell his Outhouse and buy a San Francisco Townhouse.

[bsrsharma]

Exchange rate matters too. If UK Pound = 4 US $ say, A Londoner may like to sell his Outhouse and buy a San Francisco Townhouse.

[justme]

>it is probably going further south; except of course my >current neighborhood in San Jose. The market there is going
>up, way up.

Raptorduck,

Which zip code or subarea of SJ is that? I very much doubt that your claim will withstand scrutiny.

By the way, here *is* some data that shows South SJ is in the dumps

http://www.burbed.com/ (Oct 12 posting)

[justme]

>it is probably going further south; except of course my >current neighborhood in San Jose. The market there is going
>up, way up.

Raptorduck,

Which zip code or subarea of SJ is that? I very much doubt that your claim will withstand scrutiny.

By the way, here *is* some data that shows South SJ is in the dumps

http://www.burbed.com/ (Oct 12 posting)

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